European Central Bank President Mario Draghi attends a monthly news conference in Frankfurt in this April 2012 file photo. Mr. Draghi is widely credited with the current rise in positivity over the resolution of Europe's debt crisis.

Speaking to Portuguese diplomats in Lisbon last Thursday, Mr. Barroso said that "the perception of risk in the eurozone has disappeared." The former Portuguese prime minister added, "Investors have understood that when European leaders commit themselves to doing everything to safeguard the integrity of the euro, they mean business."

So, will 2013 be remembered as the year the eurozone crisis came to an end – without the much-predicted collapse of the common currency, or at least the dropout of some of its members? Or are the skeptics right who say that European leaders have only bought time, and 2013 will be the year eurozone citizens even in the richer countries feel the painful results of austerity programs, sending the European economy deeper and deeper into recession?

Barroso is not alone in his positive assessment. Last month, German Finance Minister Wolfgang Schäuble commented on a successful buy-back of Greek government bonds, saying that the worst of the crisis was over. And according to a survey by German research group Sentix, the majority of the European business community shares this optimism. The number of investors who believe that one or more eurozone members will have to leave the common currency in 2013 is now at about 25 percent, which may still seem high, but is actually down from 33 percent last November.

The man widely credited with this rise in positivity is Mario Draghi. When the president of the European Central Bank announced last summer that his institute would do all it took to save the euro, and when the ECB subsequently bought large amounts of government bonds from ailing economies like Greece, Portugal, and Spain, it seemed to convince the financial markets that there was no point in betting on the demise of the common currency.

Issues remain

But critics say the underlying problems are yet to be addressed. The fundamental one is competitiveness. While sharing the convenience of a common currency and common interest rates, there are large differences between the eurozone members in productivity and labor costs.

The latest ranking of best- and worst-performing nations, published by the World Economic Forum last year, put Finland at third place out of 144, Germany at sixth, Portugal at 49th, and Greece at 96th. It is hard to see how austerity measures alone can mitigate the divide, even though wage cuts and reduced pensions have already taken place on a massive scale in Greece, Spain, and Portugal.

Peter Bofinger, economist at Würzburg University and one of the German government’s economic advisers, believes that while reforms in southern European countries are inevitable, Germany, Europe’s most powerful economy, needs to do more to help. In fact, it needs to make itself less competitive.

“We need wage increases of 5 percent and more this year,” he says. “We need higher pensions and higher welfare payouts. Only if Germany gets more expensive, if it loses competitiveness relative to the other eurozone members, we can fix this fundamental flaw in the construction of the eurozone.”

Professor Bofinger, like Barroso and many others within the European Union, is also a strong supporter of eurobonds: debt issued and guaranteed by the eurozone as a whole, in a measure that would provide cheap credit for economies like Greece and Portugal – which at the moment cannot raise any money at the financial markets – at the cost of the richer economies. German Chancellor Angela Merkel has repeatedly rejected the idea, arguing that any socializing of debt must be preceded by deeper fiscal and economic integration of the eurozone.

Potential for tumult in 2013

The coming months will see European leaders arguing about the road map for this integration. A banking union, which puts large European banks under the supervision of the ECB, has already been decided on late last year. Now the issue is budgetary control. Before they dish out more money to their poorer neighbors, the richer eurozone members want a say in how that money is being spent. This is certainly true for Germany, where Mrs. Merkel wants to be reelected in September and does not want to be seen as squandering her voters’ taxes.

David Cameron, Britain’s prime minister, is likely to throw wrenches into the works of further European integration. While not a member of the eurozone, Britain holds Europe’s biggest financial market, the City of London. Bowing to pressure of the anti-European faction within his Conservative Party, Mr. Cameron has already announced that he is going to veto amendments to the European treaties necessary for fiscal integration unless Britain gets certain concessions. He is certain to clash with other European leaders, like French President François Hollande, about this special treatment.

And while this wrangling about the powers and competence conceded to Brussels goes on, there’s always the possibility that voters in the southern European countries will lose patience. In Portugal, Barroso's homeland, President Anibal Cavaco Silva used his New Year’s speech to condemn the bailout terms dictated by EU and International Monetary Fund (IMF) as “social injustice” which led to a “vicious circle of economic decline and a reduction of tax revenue.”

Cyprus will be the next eurozone member to receive financial aid (after Greece, Portugal and Ireland), and Greece may have to ask for a third bailout. In Italy, where the “cabinet of technocrats,” unelected financial experts led by former ECB banker Mario Monti, managed to keep the economy afloat, general elections in February could bring new uncertainty about the country’s prospects.

“They haven’t done anything to increase their competitiveness,” says Mr. Feld, “yet is the country that works the least among eurozone members each year.”

German officials in the past few months did not hide their disappointment in what they perceive as an ineffective response to the crisis by Mr. Hollande. With negative growth predicted for most of Europe in 2013, it would be a major blow if the eurozone’s second economy were to stumble.